“The government is not shifting on plans to increase interest charges on student loans in England – which will rise to up to 6.1% from the autumn term.
There had been speculation about a rethink over interest charges because of fears of excessive levels of debt. But on Tuesday the Department for Education and the Student Loans Company confirmed the proposed increase. The Department for Education said:
“borrowers will only ever pay back what they can afford”.
Labour’s shadow education secretary Angela Rayner said young people faced a government which saw “education as something to be sold and their aspirations as something to be taxed”.
With fees increasing to £9,250, the Institute for Fiscal Studies has calculated that students will have accumulated £5,800 in interest charges before they have even graduated.
The increase from 4.6% to 6.1% in interest charges will also apply to other former students who have studied since fees were increased to £9,000 in 2012.
The interest rate is based on the inflation rate, using the retail prices index in March, plus an additional 3%.
Former Labour education minister Lord Adonis has called the level of interest charges “indefensible”, and the head of the Russell Group of universities has called for a reassessment of interest rates.
The amount of debt owed by students this year went past the £100bn level, having more than doubled in six years.
Labour’s Angela Rayner accused the government of “sneaking these changes through without allowing MPs to vote on them”.
“Graduate debt is already skyrocketing, and too many students fear a lifetime of debt,” she said.
The department says that the loans give “protections other lenders don’t offer”, such as not requiring repayments if income falls below a threshold of £21,000 and that any unpaid debts are paid off after 30 years”.
There is an alternative to the picture painted below. Qualifi qualifications at Level 3, 4, 5 and 6 are recognised for Advanced Learner Loans (subject to meeting qualification, provider and student criteria – please see the related news item in the Qualifi news section). Fees to studying Qualifi qualifications, unlike the majority of Universities, are less than the annual £9,000 tuition fee. Furthermore, students attaining level 5 Qualifi qualifications can progress on to final year Top Up Honours Degree with our partner Universities thereby enabling students to gain a UK University awarded honours degree with less debt than having studied full-time for 3 years at a university.
If you would like more information about the options available to you, please see additional information within the Qualifi website www.qualifi.net or contact us in order that we can discuss with you the options available.